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[Joel’s Note: In the July 3 edition of
The Daily Reckoning, senior editor
Eric Fry wondered
aloud why more and more Americans are renouncing their
US citizenship. “Americans who bail on their country may not
think things are going to get any worse any time soon,” wrote
Eric, “but they clearly do not believe things are going to get
better. So far, the pitter-patter of footsteps heading
for the exits is barely a murmur...but the murmur is getting
louder.”

So is it the rampant overspending mentioned above motivating the
as-yet mini-exodus? A loss of freedom? Over-regulation? The
weather?

I administrate an important website (Isaac Brock Society) with
multiple bloggers who cover the issue of expatriation, expat
taxes, FBAR and FATCA. As someone who expatriated in 2011 and who
has blogged on the issue for the last two years, I believe that
the vast majority of those who relinquish their US citizenship
are people who are already long term residents overseas — not
people who decide to leave the United States in order to escape
the growing oppression of the United States.

You have to understand what has happened. In 2010, I decided to
renounce my US citizenship because of the 2008 HEROES Act which
created a financial Berlin Wall, which would penalize covered
expatriates with an exit tax. I haven’t lived in the US since
1986. ALL of my wealth is now in Canada. ALL of my wealth was
earned in Canada. I have filed my US income taxes and I owed
nothing. But I was not going to allow your country to prevent me
from exercising my freedom to decide where I would be a citizen,
just because I had over 2 million in assets. But the thing is I
don’t have that much, but with the way your Federal Reserve is
inflating the US dollar (I am a frequent reader of The Daily
Reckoning), I fear that my small Canadian fortune would be
worth well in excess of 2 million puny US dollars. I decided it
was time to renounce. But the thing is, I wasn’t even a Canadian
yet, because as a proud American who always traveled on an
American passport, I had never seen the need to take on Canadian
citizenship. It took a year to obtain my Canadian citizenship.
Now the Queen of Canada is the only thing standing between me and
your arbitrary and capricious POTUS. That’s my story. On February
28, 2011, the day I became a Canadian, I ceased to be a United
States citizen.

But around 2009, the IRS, who was now in charge of the
enforcement of the FBAR law, began to threaten people with
substantial fines for not filing. They created an Overseas
Voluntary Disclosure Program, an amnesty program with a
confiscatory penalty of only 20% of your financial wealth, in
some cases including real estate. Today the OVDP fine is 27.5%.
This is in lieu of maximum willful penalty rate of about 383% of
your financial wealth, so warns the IRS today. In the summer of
2011, these OVDI/OVDP programs were made known to the general
public in Canada by a complicit Canadian media — Canadian
“journalists” began to do the dirty work of scaring the hell out
of US persons in Canada. This set off a huge number of people who
needed to renounce their citizenship or otherwise clarify their
citizenship status (if they had relinquished decades ago but had
no proof of their relinquishment — US border guards were
insisting that they travel on a US passport).

This is what Marvin van Horn (cf. Amy Feldman article at
Reuters), one of our bloggers and
one of the early victims of the 2009 OVDP, has called a Tax
“Jihad” waged on US expats around the world.

Thus, I think there is also strong evidence of the following: (1)
the vast majority of Certificates of Loss of Nationality are
issued not to wealthy people quitting the US to avoid taxes but
long term expats who have decided that relinquishing is the best
way to avoid this Tax Jihad; (2) the government reported stats
are well below the true number of people who have relinquished: I
am not on the list despite my 29 February 2012 approval date of
my CLN. Many people have reported similar results. I would not be
at all surprised if over 10,000 people relinquished their US
citizenship last year. In other words, the US government is lying
and incompetent in its reporting of the numbers. Would that be a
surprise to you?

DR: Uh…no.

And here’s Reckoner Terry, also writing from north of the
49th Parallel…

Read your Expatriation story with great interest. I moved to
Canada 27 years ago to take a temporary job and fell in love with
Vancouver. Not only did I stay, I became a dual citizen. Started
a business. Bought a home. However, I remained a proud American
with dreams of returning or retiring to my homeland — or at least
living there half the year with my Canadian wife. Not anymore.

Now I’m seriously considering giving up my US citizenship. Why?
Because Uncle Sam thinks every dollar I make in Canada is his
business. Last year I had to pay taxes in both Canada and the
states, yet I have not worked a day in the US since leaving in
the mid-’80s. The US filing requirements for people living
outside the country are onerous and invasive. The US is the only
country with such requirements. Not only must I report my income,
I must report the highest balance of the year from any bank,
brokerage or other financial account outside the US, including
account numbers, institution addresses, etc. I must supply the
financial statements and Canadian tax filings from my small
business. I must report the smallest details from every share of
stock bought and sold in Canada or the US. Thus I must pay two
tax accountants, because the reporting is so complex. If I don’t
file, if I make the smallest mistake in my filings, the penalties
are outrageous — whether I owe money or not. Lately I have feared
visiting my family in the states, because if there have been any
irregularities in my US tax filings, I can be held in the US
indefinitely.

And get this…a child of a US citizen born in Canada must also
file a US tax return — even if they’ve never spent a day of their
life in the good ol’ USA.

I hate the thought of bailing on my homeland. But the cost,
aggravation, time and anger this policy generates has worn me
down. What do I get in return? The chance to go back to my
homeland anytime I want. Well, maybe that’s not such a great
incentive anymore.

I was complaining about all of this to a Canadian friend of mine.
His response? “There are people literally dying to get into the
US to work. You can do so anytime you want. Shut up and quit
complaining.”

Perhaps he’s right. But he’s never had to fill out a form TD F
90-22.1 and lie awake at night wondering if he missed a decimal
place.

Thanks for the chance to vent.

And finally, one from Reckoner Karen, looking perhaps to
head south…

For many years I have dreamed of living in some tropical locale,
mostly for the weather. But about, (what year was that election?)
3-4 years ago I started seriously planning it. We are in the
process of getting our affairs in order to make the trek south,
either to Nicaragua or Panama. I have a pension that I am not
counting on lasting for the rest of my life, otherwise our funds
are limited.

We hope to be established in a place before my pension
evaporates. I believe we could live a much richer, comfortable
life elsewhere. I can think of many reasons to leave; cheaper
cost of living, less government interference, fewer people
expecting a handout or outright living off the government, but
very few reasons to stay; family. Every day there is a new reason
to be disgusted with what’s going on in this country, we are
tired of it and figure it will only get worse when the
millionaires we elect to represent us have no idea what it’s like
to be an “average” American. We are looking for a simpler, less
stressful life and believe that is impossible to find here.